Scenar 2020-II – Update of scenario study on agriculture and the rural world

Scenar 2020-II – Update of scenario study on agriculture and the rural world

Nowicki, P. et. al., 2010

Content

The study looks at three scenarios. The reference case assumes a 20% (nominal) CAP budget reduction, reduced intervention stocks, full decoupling, a 30% direct payment reduction, a 105% increase for the second pillar, and a moderate Doha agreement (based on the Falconer paper, including the elimination of export subsidies). The conservative scenario presumes that the Health Check results are largely maintained, direct payments reduced by only 15% and second pillar payments raised by 45%. The liberal scenario is very liberal indeed, with a 55% CAP budget reduction, no intervention stocks, no direct payments, a 100% increase for the second pillar and no tariffs.

Findings on agriculture

All findings refer to the 2007-2020 period (if no other dates are mentioned).

Growth of agricultural production (volume), annual growth rates: low and almost identical across scenarios (between 0 and 0.25% for crops and livestock; aggregated change 2007-2020 for livestock: about +2% in reference and conservative, -4% in liberal).

Change in agricultural land use: roughly unchanged in reference and conservative, -6% in liberal due to decline in EU-15 (driven mostly by the abolition of the SFP).

Change in land price: roughly unchanged in reference and conservative, decrease of 30% in liberal.

Development of agricultural and non-agricultural wages: increase of agricultural wages by 20% in reference and conservative, by 12% in liberal; increase of nonagricultural wages close to 30%.

Farm income (of all EU27 farmers) by 2020 compared to 2002: -7% in reference and conservative, 22% lower in liberal than in reference.

Number of farms by 2020 compared to 2003: -34% in reference, conservative 1% lower and liberal 15% lower than reference; decrease stronger in EU-12 (-42%) than in EU-15 (-28%); hardest hit: mixed livestock, mixed crop, cattle, and arable crops; only slight decrease for vegetables and permanent crops, increase for other animals.

’The reduction of border support (import tariffs and export subsidies) has a higher impact on agricultural production than the reduction of domestic income support. On the other hand, reducing domestic income support has a larger impact on farm income than the reduction of border support.’

Findings on rural development

Strong rurality is not synonymous with negative economic or demographic trends. E.g. 422 regions have a negative and 435 regions a positive demographic trend (with negative developments in the eastern Member States and at the southern and northern borders of the EU).

’There is no evidence that the EU-27 regions with an above average agricultural employment are generally showing negative reactions. Hence, it shall be emphasised that rurality and agricultural vocation are not a sign of weak development perspectives.’

Surveys of live satisfaction and happiness give very similar results for urban and rural areas.

Comment

The agriculture figures contradict all the alarmist warnings about the end of European farming and massive land abandonement. Even in the extreme liberal scenario, total production volumes slightly increase and land use shrinks by only 6% during a 13-year period.

The rural development findings show the unreasonableness of spreading money to all rural areas and of tying it to agriculture.